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Apr 17 - 23, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

One year of Bouteflika: Algeria still in turmoil

One year after taking over in strife-torn Algeria, President Abdelaziz Bouteflika, who staked his presidency on ending bloodshed, is still struggling to curb the violence tearing the country apart.

His assumption of power on April 15, 1999, was greeted with high hopes throughout a land exhausted by terror that has claimed an estimated 100,000 lives since rebels began their campaign in 1992.

Introducing a "civil reconciliation" programme, Bouteflika had more than 15,000 alleged fundamentalist sympathizers released.

He masterminded an amnesty law, in effect between last July and last January, to totally or partially pardon rebels deemed not to have perpetrated crimes of violence or rape, or to have placed the bombs in public places that have caused so much death and misery among innocent civilians.

It amnestied 1,700 fundamentalists who came forward, and a general amnesty forgave some 3,000 fighters in the Islamic Salvation Army (AIS), which had observed a truce since 1997. This is the armed wing of the Islamic Salvation Front (FIS).

Algeria was plunged into civil war when a second round of elections set to be won by the FIS were cancelled in 1992. The FIS was banned as a political group and the AIS was dissolved early this year.

Kuwaiti stocks up

The Kuwait Stock Exchange (KSE) rebounded strongly to close the week Wednesday up two per cent on the back of growing investor confidence and positive yearly financial results from most listed companies, analysts said.

The KSE index closed at 1,395.9 points, down 3.2 per cent since the end of 1999 and 50.8 per cent on its all-time high in November 1997. The index gained 27.2 points, the largest gain in a single week since the start of this year.

OPEC to bank extra $30 bln from oil price surge

Saudi Arabia, Kuwait and other Middle East oil exporters will together collect an extra $30 billion this year in revenues thanks to higher energy prices, the International Monetary Fund said on Wednesday.

World oil prices will average about $24.50 a barrel in 2000, up nearly 35 per cent from $18.25 a barrel last year, according to the IMF's world economic analysis.

The IMF issued its analysis of the world oil market less than two weeks after the Organisation of Petroleum Exporting Countries agreed to increase oil production by seven per cent to ease prices. Crude prices have declined by about $10 from a nine-year peak of $34.37 a barrel in early March.

The new IMF forecast means that worldwide oil exporters would collect about $60 billion more in sales this year. "On a regional basis, the bulk of the higher oil export revenues would accrue to the Middle Eastern exporters, to the tune of almost $30 billion," the IMF report said.

Oil exporters are expected to use some of the extra money to ease spending restraints adopted during the 1997-98 slump in oil prices.

Last year, OPEC nations earned a total of $133 billion in oil revenue. That could soar as high as $211 billion in 2000, according to a US Energy Department estimate last month, based on the assumption that world prices would average $26.62 a barrel this year.

The US government said last week that world oil prices would gradually decline to $23.50 a barrel by the end of this year.

The IMF cautioned that oil prices remain "subject to considerable uncertainty" over the next few months due to both supply and demand factors.

Iraq, which operates outside OPEC agreements because of international sanctions, has said it will ramp up production, but it remains unclear how much more crude the nation will pump.

Saudi investment law wins qualified praise

Saudi Arabia, throwing open its doors to foreign investors, won qualified praise on Tuesday for a new investment law.

But analysts warned the devil would be in the detail and said it was unlikely the long-awaited law would spark large foreign inflows immediately, adding the energy sector was likely to see this first.

"The initial statement sounds good, but the real flavour will be seen in the details...and only then will we able to see whether it will be attractive enough for foreigners to come in," one Jeddah-based economist told Reuters.

The law was approved on Monday by King Fahd and allows international investors to have full ownership of projects and related property in the desert kingdom.

Foreigners have long argued they needed better guarantees and full ownership rights. They had been limited to 49 per cent stakes in ventures and barred from owning property in a country where about a quarter of the 20 million people are expatriates.

Saudi real estate brokers said they expected a boom in the property sector as soon as foreigners entered the market.

On corporate taxes, the law says the state would "bear 15 per cent of taxes imposed on company profits exceeding 100,000 riyals ($26,000) a year".

Analysts said this move was likely to reduce taxes imposed on firms with high profits to 30 per cent from 45 per cent, but some cautioned that the exact levels were not yet clear.

"We are still missing the actual tax rate that would apply to businesses. I think as soon as they resolve the tax issue, foreigners will be very interested in investing," said one Western diplomat.

Arif Sherani, chief economist at Riyadh Bank, said allowing 100 per cent foreign ownership and reducing corporate tax for foreigners were essential elements to the law, without which there would have been little point to the overhaul.

Kuwaiti MPs approve 2.5 pct tax

Kuwaiti MPs gave provisional approval for a bill taxing private firms 2.5 per cent on annual profits to finance the employment of Kuwaitis outside the overstaffed public sector.

The national employment bill, which still requires a second round of voting next week, would also limit the number of children entitled to social security to five per family and impose an array of other charges.

The bill introduces new charges on issuing work permits for expatriates and links winning government contracts and tenders to employing a certain per centage of nationals, to be fixed later by the government.

Gulf, Europe fail to fix date for free trade block

The six-nation Gulf Cooperation Council (GCC) and the European Union have not yet agreed during talks here on a date for the start of a planned free-trade zone, a Gulf official said Tuesday.

"The Europeans are asking for more time before the agreement takes effect," said GCC official Jabara al-Suraysari, who is in charge of coordinating the talks between the two sides.

He told reporters here that Tuesday's talks centred on the classification of exports from the GCC including aluminium, petrochemical and refined oil products.

He said the two sides would continue discussions at their next meeting, planned for May in Brussels.

The EU has insisted that the GCC must have its own customs union before it signs a free-trade agreement with the petromonarchies.

The GCC states, which are currently the fifth largest export market for the EU, are hit by EU taxes on aluminium exports and petrochemicals of at least six per cent.

MobiNil profits plunge

Mobile phone operator Egyptian Company for Mobile Services (MobiNil) said on Monday it posted a 61 per cent fall in net profits in the first quarter of 2000 to 35.04 million pounds ($10.14 million).

Etisalat profit slip

United Arab Emirates telecoms operator Etisalat saw revenues surge 21 per cent last year to 1.39 billion dollars but profits slipped two per cent to 537 million dollars. After record earnings in 1998, the company reported profits of 1.97 billion dirhams for 1999, 41 million dirhams less than the previous year.

Iran allows private banking

Iran said on Monday it would allow private banking across the country for the first time since the 1979 Islamic revolution, but would not initially let foreign banks set up in the country.

"The private sector can establish banks in Iran," Central Bank Governor Mohsen Nourbakhsh told reporters. Asked if the new regulations would apply to foreigners, he said: "At present, no." The landmark decision follows a recent move by parliament to end the state monopoly on banking. Iran nationalised all private banks after the revolution, in which it became a republic, in an attempt to prevent the outflow of national wealth.

The decision is part of a five-year plan by President Mohammad Khatami's government to liberalise and streamline the state-dominated economy, widely seen as inefficient.

The plan, which runs from 2000 to 2005, hopes to achieve ambitious growth targets, including an average 8.5 per cent rise in private investment.

Merger called off

A planned merger of two United Arab Emirates-based banks to create the country's largest bank has been "shelved", a newspaper reported Monday.

A senior official of the National Bank of Dubai (NBD) told the Khaleej Times "there were a lot of hurdles and considerable resistance from the bureaucracy."

Jordan joins WTO

Jordan on Tuesday became the 136th member of the World Trade Organisation (WTO), leaving only six of the 12 Arab states of the Middle East region outside the Geneva-based body.

Jordan's entry, delayed by a few weeks as a casualty of the collapse of a WTO Ministerial Meeting in Seattle early in December, came just over six years after the kingdom began negotiations to join the organisation's predecessor, the GATT.

Jordan's accession was originally set to be approved by existing member countries in Seattle, but was finally agreed at a meeting of the WTO's ruling General Council on December 17.

Iran economy grows 2.4 pct

Iran's economy, dominated by oil production, grew by 2.4 per cent in the year to March, Central Bank Governor Mohsen Nourbakhsh quoted as saying on Tuesday.

Nourbakhsh said Iran's exports grew by 49 per cent to about $19.5 billion, including $16 billion in oil exports, in the year which ended on March 19.

Imports grew by 14 per cent to about $12.5 billion, the official IRNA news agency quoted him as saying.

The governor said the trade surplus, due to high oil prices in the past year, had helped reduce Iran's foreign debt, which he said stood at $10.5 billion.

He said inflation was hovering at about 20 per cent.

EU grants 50 mln euros for Lebanese reforms

EU Commissioner for External Affairs Chris Patten signed an accord with Lebanese officials for the European Union to provide 50 million euros (dollars) to finance structural reforms here.

"That 50 million is a gesture, a mark of confidence in the reform process being undertaken here," Patten told reporters.

"We very much admire the reforms which are being introduced and pushed through by (Finance Minister George) Corm, fiscal reforms and reforms in the management of the economy," Patten said.

The grant is part of the 184 million euros in direct assistance the European Union is providing Lebanon under the Euro-Mediterranean partnership programme.

Morocco drafts $7.75-bln

Morocco's government has drafted a 80.2-billion dirhams ($7.75 billion) six month budget from July that sees a three-percent growth in Gross Domestic Product (GDP) and inflation at 2.3 per cent.

A copy of the draft budget obtained by Reuters on Friday showed that the budget deficit is expected to reach 5,073-million dirhams ($490 million) in July/December 2000, down 36.2 per cent from 7,956 million dirhams in the same period in 1999.

The budget forecasts an unchanged current account deficit at around 1.0 per cent of GDP but a 63-percent rise in privatisation receipts to 2,850-million dirhams ($275.3-million) during July/December 2000 compared with the last six months of 1999.

Morocco woos African leaders

King Mohammed VI of Morocco announced this week that his country will write off the debt of least-developed African countries and scrap all custom barriers for imports from these countries. The move is seen by independent observers here as a tactic to win more African support for Rabat's claims over the Western Sahara.

"I declare from this rostrum, that we are cancelling all the debts owed to Morocco by the least developed African countries, and that we are lifting all customs barriers for the goods imported from those countries," the King said in a speech before the Africa-Europe summit, held in the Egyptian Capital city of Cairo.

The debt to be cancelled is valued at 120 million US dollars, the Moroccan Economy and Finance Ministry said, without disclosing the list of the countries that will benefit from the exemption decision.

Morocco's imports from these least developed countries remains weak, standing at 54.6 million US dollars in 1999. The figure represents only 13 per cent of the Maghreban nation's purchases from Africa as a whole.

UAE surpasses Saudi

The UAE has overtaken Saudi Arabia to become Britain's biggest market in the Gulf, according to the UAE Gulf News paper dated April 9th.

"The UAE accounted for 37 per cent of our total exports to the GCC totalling 3.7 billion in 1999, with Dubai alone accounting for 800 million, or 20 per cent," said Ted Cole of the British embassy in Dubai, according to the paper.

"Our exports to Saudi Arabia declined 40 per cent in 1999. And while on paper the UAE was within 125 million of our exports to the kingdom, if you take into account indirect exports of aeroplane engines, the UAE last year overhauled Saudi Arabia as the UK's biggest GCC market," he said, the paper reported.

Saudi Internet subscribers up

The number of Internet subscribers in Saudi Arabia has grown by more than 160 per cent since the service was launched last year, the commerce minister said on Saturday.

"The kingdom now stands among the top five Arab countries in terms of Internet growth," Commerce Minister Osama bin Jaafar Faqih told an Internet seminar in Riyadh.

Faqih gave no figures on the number of people with online access in the oil-rich kingdom, but a Saudi Telecommunications Company (STC) official said in February there were around 100,000 subscribers in Saudi Arabia and plans were underway to triple the number of subscribers this year.